Business confidence rebounds in Scotland

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Business confidence in Scotland rose 11 points in April to 28%, according to the latest Business barometer of Bank of Scotland Commercial Banking.

Scottish businesses reported greater confidence in their own business prospects month-on-month, up 16 points to 34%. Combined with their optimism in the economy – up five points to 21% – this gives an overall confidence reading of 28%.

The barometer surveys 1,200 companies monthly – including 98 in Scotland – with the overall balance of opinion weighing the percentage of companies whose outlook is positive, compared to those which are negative.

Scottish businesses reported a range of growth opportunities for the next six months, including investing in their team (30%), expanding into new markets (28%) and evolving their offering (26%).

A net 26% of businesses in Scotland expect to increase headcount over the next year, up 17 points from last month.

Overall UK business confidence remained unchanged in April at 33%.

Businesses’ outlook on their future business prospects rose five points to 39%, but their optimism about the economy dipped slightly from the March reading (from 32% to 26%).

Fraser Sime, Regional Director for Scotland at Bank of Scotland Commercial Banking, said: “Rising levels of inflation coupled with growing cost pressures have hit businesses hard in recent months.

“But despite these headwinds, Scottish businesses have shown tremendous resilience as business optimism rebounds in April.”

From a sector perspective, manufacturing confidence rose eight points to 43%, reversing some of the 19 point decline in March; helped by somewhat stronger business prospects.

Retail and services confidence, however, was little changed in the month and weaker than at the start of the year as businesses grew increasingly concerned about the outlook for the broader economy. . Retail confidence edged up one point to 29%, while services confidence was unchanged at 32%.

Construction confidence fell for a second month to 33%, but remains at the level of the average for all sectors.

Hann-Ju Ho, senior economist Lloyds Commercial Banking, said: “The April data is mixed and follows the significant decline in business confidence in March following Russia’s invasion of Ukraine.

“Although companies reported a partial recovery in their business outlook, optimism for the broader economy declined for a second consecutive month.

“The positives remain as overall confidence is above the long-term average, but growth is still expected to slow over the coming months and many companies will remain cautious in the face of these headwinds.”

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